State and Federal Laws Protect Consumers Who Buy and Receive Gift Cards

Virtually everyone gets or gives a
gift card for a holiday or a birthday. On average, eight of every ten consumers
will buy a gift card for holiday giving alone. The gift card business is a
billion-dollar industry. Now there is a federal gift card law as well as an
Ohio gift card law to help protect you if something goes wrong.

Q:Why are there two laws covering gift cards?

A:The state law was enacted several years
before the federal law, and each law covers different gift cards in different
circumstances, with some overlapping coverage. Because gift cards may sometimes
be used in different states, a federal law was needed to protect consumers who
purchase and receive gift cards.

Q:What do the gift card laws do?

A:Under Ohio’s law, a gift card must
maintain its full value for at least two full years from the date it was
issued. The Ohio law also prohibits retailers from charging service or other fees
for two years from the date the card was issued. The federal gift card law only
covers store-issued gift cards and bank-issued gift cards, but it requires those
cards to have full value for at least five years. It is important to remember
that, when you buy a gift card at a third-party location, only the Ohio law
applies. Such a third-party location, called a “card mall,” might be a kiosk
within a grocery store or a drug store that offers cards from a wide variety of
other sources.

Q:Do
these laws apply to all gift cards?

A:No.The Ohio law does not apply to cards given as part of a customer loyalty
program, cards sold by non-profit organizations, cards given to employees by
their employers or gift cards that are usable at any unaffiliated sellers of
goods or services, such as Visa or MasterCard, etc., or to prepaid telephone
calling cards. The federal law only applies to store-issued and bank-issued
cards and to gift cards that are freely given away as a promotion.

Q:Can
I be charged a fee if I don’t use my gift card for a while?

A: If your card is covered by the Ohio
law only, then you do not have to pay any fees for at least two years. If the
gift card is covered by the federal law, then any fees have to be clearly
disclosed on the card itself or with its packaging, and no fee can be imposed
unless the card has not been used for at least a year.

Q:If
I receive a card with no expiration date, will be good for only two years?

A: No. The law says that a card that
does not include an expiration date is presumed to be valid forever.

Q:What
if I buy or receive a card through an online source or from a retailer in
another state? Might Ohio’s law still apply?

A:If the sellerdelivered it to you in Ohio, then Ohio’s law likely would apply.
If you bought it in another state, then that state’s gift card law likely would
apply. Depending on the kind of card it is, the federal gift card law also may
apply. You can read about other state gift card laws, and find a summary of the
federal gift Card law at www.scripsmart.com/federal_gift_card_law#state_impact.

Q:What can I do if an Ohiostore breaks the law
and won’t honor the full value of my card?

A:You can go to small claims court and ask
for compensation. You can only ask to be compensated for the original value of
the card, plus court costs and attorney fees, but if the judge rules that the
Ohio Consumer Sales Practices Act has also been violated, then you may even
recover up to three times the full amount of the card plus costs and attorney
fees.

A:The Gift Card Consumer Protection Act
has recently been introduced in the U.S. Congress. This Act would ban gift
cards with expiration dates and non-use fees. It would also prevent companies
filing for bankruptcy from selling gift cards and require them to accept and
honor unredeemed cards.

This “Law You Can Use” column was
provided by the Ohio State Bar Association. It was prepared by consumer advocate Ronald Burdge, an attorney
with the Dayton firm of Burdge Law Office Co LPA.Articles appearing in this column are
intended to provide broad, general information about the law.Before applying this information to a
specific legal problem, readers are urged to seek advice from an attorney.